Backpage prostitution trial starts in Phoenix with opening statements

Nov 25, 2023

Michael Lacey, the former editor of the Phoenix tabloid New Times, was an old school newspaper man who wasn’t involved in the day-to-day operations of Backpage.com, his attorney said during opening statements in Lacey’s trial on allegations that the website facilitated prostitution.

Lacey relied on the man who ran Backpage who told Lacey the website worked closely with law enforcement and made public statements that Backpage was free of prostitution ads, Lacey’s attorney, Paul Cambria, told jurors in the federal trial Thursday.

“He believed he was not facilitating and that Backpage, which he owned a part of, was not facilitating prostitution,” Cambria told jurors in his opening statement.

Cambria said the website was abused by bad actors and that it should be held harmless. He compared it to telephones, the mail system or express delivery systems used for crimes, but that aren’t shut down.

Lacey and four other former Backpage executives and employees face federal felony charges of facilitating prostitution with the website. Prosecutors contend it was the practice at the website to edit ads in order to keep up a patina of legitimacy, even though all involved knew they were involved in the selling of sex.

The editing of the ads worked the opposite way: Taking certain words out wasn’t done to hide the intent of the ad, but rather to stop any illegal activity from taking place, he said.

“If you take words out, you are not promoting criminal activity,” Cambria said. “You are fighting against criminal activity.”

Cambria said that Lacey relied on the word of Carl Ferrer, the former CEO of Backpage and the man who initially pitched the idea of creating an online website for what were the classified ads that filled the pages of New Times and other alternative weeklies in the chain.

Ferrer has pleaded guilty on behalf of himself and on behalf of the website, Backpage, to conspiring to facilitate prostitution. He is listed as a witness for the government in the case.

Lacey was told by Ferrer that the website was "doing everything possible to keep bad actors off of Backpage," Cambria said.

Cambria said ads placed in the massage or escort sections of Backpage were not necessarily indicative of illegal activity, no matter how racy the language or photos were.

“You can’t know unless you respond to an ad and the proposition is made,” he said. An ad that might suggest sex isn’t illegal, he said, though one that would explicitly advertise it would be.

“There are a lot of adult things that can be done that are not criminal,” he said.

Cambria said Backpage received accolades from law enforcement agencies for working with them to find children who authorities suspected were advertised on the site.

“They were thanked time and time again for their assistance,” Cambria said.

He read to the jury excerpts of laudatory letters from the FBI and the Denver Police Department praising Backpage for its cooperation.

The website was “rooting out, if you will, those who used Backpage for illegal reasons,” Cambria said.

Cambria's was the first of five opening statements jurors were set to hear in the government’s second attempt to secure convictions against Lacey and the other defendants. The first trial, which took place in the summer of 2022, ended in a mistrial shortly after it began.

The second trial was delayed for a few weeks following the July 31 death by suicide of James Larkin, the longtime business partner of Lacey at both New Times and Backpage.

Larkin’s death was only obliquely noted during the opening statements. Cambria referred to Larkin as “deceased.” The prosecutor who gave the government’s opening statement, Andrew Stone, mentioned that Larkin was a former co-owner of Backpage but “not a defendant” in the case.

Potential jurors were queried about what they knew of Larkin’s death during the two-and-a-half days of jury selection that began Tuesday at the U.S. District Courthouse in downtown Phoenix. Judge Diane Humetewa had ruled that knowledge of the death would not mean automatic disqualification. Instead, jurors were questioned on whether they could still judge the case fairly despite knowing of it.

A panel of 12 jurors and four alternates were seated early Thursday afternoon.

In his opening statement, Stone said the defendants pursued a years-long strategy of building up their prostitution business and maintaining it.

Stone mentioned each defendant’s role in Backpage’s operations.

Lacey, he said, was one of the principal owners and stood to earn the most money from the operation. Stone showed a slide that said Lacey made $38 million in 2013 and $50 million in 2014.

Scott Spear, a former executive vice president, was key in the buildup of the business, Stone said.

John “Jed” Brunst, the former chief financial officer was a “key cog, key player,” he said, in keeping the money flowing after credit card companies stopped processing transactions for adult advertising on Backpage.

Gary Lincenberg, an attorney for Brunst, told jurors that his client never met anyone who took out an ad on Backpage. "He's just an accountant," he said during his opening statement.

Stone, the prosecutor, said that operations manager Andrew Padilla and assistant operations manager Joye Vaught ran the system that edited the ads, relaxing and tightening the standards through the years.

Stone told jurors that the Backpage executives and employees, in the site’s initial years from 2010 to 2018, worked to generate prostitution ad traffic. One strategy, Stone said, was partnering with a website called The Erotic Review that posted reviews of prostitutes.

Stone said internal emails among Backpage executives and employees showed the site did this in part to build “brand awareness” for Backpage. Traffic generated from The Erotic Review exceeded that from Google or any other site, Stone said.

Stone said the purposeful relationship with The Erotic Review “eliminates any doubt” about what the ads were selling.

After 2018, when Craigslist shut down its adult advertising section, bowing to pressure from law enforcement and advocacy groups, Backpage saw an “avalanche” of adult ads, Stone said.

It no longer needed to market itself, he said. It now just needed to maintain the business, he said.

It did so, in part, by sanitizing its advertisements, removing words that would be indicative of a prostitution transaction, he said.

It was an effort to “make prostitution ads look less like prostitution ads,” Stone said.

After credit card companies stopped accepting payments for adult advertising on Backpage, Stone said executives used other methods to keep the cash flowing. They employed gift cards, money orders, shell companies and cryptocurrency, he said.

Stone said that Backpage would become the nation’s No. 1 website for prostitution activity. “That was no accident."

The prosecutor mentioned an opinion column drafted by Lacey that defended Backpage’s practices.

“Backpage is part of the solution,” Lacey wrote in the opinion column, which is quoted in the indictment. “For the very first time, the oldest profession in the world has transparency, record keeping and safeguards.”

But Cambria said Lacey meant Backpage was working to bring bad actors to light.

Lacey, he said, was working to “expose the people who were trying to offer the prostitution services.”

Reach Ruelas at 602-444-8473 or at [email protected]. Follow him on X, formerly known as Twitter, at @ruelaswritings or @richardruelas on Threads.